Lok Sabha TV- Public Forum : H1B-Concerns

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Lok Sabha TV- Public Forum : H1B-Concerns


 

 

The H1B is a non immigrant visa in the US set up under its Immigration and Nationality Act. It allows US employers to temporarily employ workers from other countries in specialty occupations. Indian IT companies are the largest users of this visa. They employ more than 50% employees on it. The US Government has recently increased the fees for L1 and H1B visas which will affect the Indian IT companies the most. India has asked for discussions with US under the aegis of WTO to settle this matter. President elect Mr. Donald Trump said that the creation and return of jobs to the US citizens would be the single biggest agenda of the first 100 days of his administration. There are claims made by the American political class that the H1B visa was used to import cheap labour but has resulted in taking away the jobs of Americans.

H1B Visa Concerns:

  1. Reduction in H1B visas from 65000 to 15000.
  2. Change it from a lottery system to salary based system.
  3. Remove the exemptions which make it easier for a person with post graduation degree to automatically come in.
  4. Change some of the caps for the students who are there in the US for moving to work visas.
  5. Check on misuse of the visa in terms of large number of applications being put up by the companies as there is a lottery system. The larger the number of applications, more is the chance for a company to win it.

Analysis:

In the overall scheme of things, US is India’s biggest market and the IT companies in India have reached a stage where they can begin to reinvent themselves. They can explore other markets or domestic markets. This should be more of a concern for the Americans than India because it is going to artificially increase the cost of delivery of services within its own country by having a minimum wage cap for workers employed from other countries. These costs will likely pass on to the consumers. In a sense, whole tenet of the bases on which trading takes place between countries is being undermined. In case of products, it is known that one goes for cheaper product. India’s concerns for cheaper products from China is manifested in many ways and often barriers are imposed to prevent imports of Chinese goods in the country. The same narrative is playing out in US because they feel they have been hurt as a result of outsourcing to India.

However, the other part of the story is there are benefits that are conferred on the US economy as a result of the availability of cheaper services by outsourcing. There are several studies that have demonstrated that there is a net gain to the US. In the short term, there has been panic among some of the leading Indian IT firms and shares of TCS, Cognizant, Infosys and others fell but in the long run these companies need to do more and more work in India, develop more products, go into more of sophisticated services, product customization and move up in the value chain. These days communication links are so good that there is no need to send the people on site. Work can be done from India itself from cities like Bangalore or Gurgaon. This will spur a kind of paradigm shift both in India and US.

Conclusion:

US economy has grown and shifted from agriculture to manufacturing and now services. It has now reached a stage where services constitutes around 80% of their GDP. What happens in the transformation phase is that even within the services sector, some of the jobs that would be done traditionally within the US, they tend to get outsourced. Outsourcing works both ways. If we look at the largest outsourcing companies of the world, they are not Indian like IBM, HP and Accenture. Each organization is sticking to the core work what it is best at and outsourcing those services which someone can do at a much cheaper rate than they can do it themselves. So it is profitable for both the service provider and its user. India has to look at creation of jobs at large for its people and look at those sectors where the opportunity can be tapped efficiently.